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3. Financial Statements for the Ministry for the Environment

Notes to the Financial Statements

1. Statement of accounting policies for the year ended 30 June 2008

Reporting entity

The Ministry for the Environment is a government department as defined by section 2 of the Public Finance Act 1989.

The financial statements of the Ministry for the Environment are for the year ended 30 June 2008. The primary objective of the Ministry is to provide services to the public rather than making a financial return. Accordingly, the Ministry has designated itself as a public benefit entity for the purposes of New Zealand equivalents to International Financial Reporting Standards (NZ IFRS).

In addition, the Ministry has reported the Crown activities, which it administers.

Basis of preparation

These financial statements have been prepared in accordance with the requirements of the Public Finance Act 1989, which includes the requirement to comply with the New Zealand generally accepted accounting practices (NZ GAAP). They also comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards, as appropriate for public benefit entities.

These are the Ministry for the Environment’s first financial statements prepared using NZ IFRS. The comparatives for the year ended 30 June 2007 have been restated to NZ IFRS accordingly.

Accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements and in preparing an opening NZ IFRS statement of financial position as at 1 July 2006 for the purpose of the transition to NZ IFRS.

The financial statements have been prepared on the basis of historical cost.

The accrual basis of accounting has been used unless otherwise stated.

The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($’000). The functional currency of the Ministry for the Environment is New Zealand dollars.

(i) Budget figures

The budget figures are the latest set of Supplementary Forecasts of those presented in the Ministry’s Statement of Intent 2008 (Main estimates).

(ii) Revenue

Operations

The Ministry derived revenue through the provision of outputs to the Crown and for services to third parties. Revenue from the supply of goods and services is measured at the fair value of consideration received. Revenue earned from the supply of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from the supply of services is recognised at balance date on a straight line basis over the specified period for the services unless an alternative method better represents the stage of completion of the transaction.

Rental income

Rental income is recognised in the Statement of Financial Performance on a straight-line basis over the term of the lease. Lease incentives granted are recognised evenly over the term of the lease as a reduction in total rental income.

(iii) Expenditure

Grants/subsidies

Where grants and subsidies are discretionary until payment, the expense is recognised when the payment is made. Otherwise, the expense is recognised when the specified criteria have been fulfilled and notice has been given to the Crown.

Cost allocation

The Ministry derived the costs of outputs using a cost allocation system. Direct costs are charged directly to the Ministry’s outputs. Indirect costs are charged to outputs based on a primary cost driver of salaried full-time equivalents. There were no material changes to the cost allocation model during the 2007/08 year.

Criteria for direct and indirect costs

‘Direct costs’ are those costs directly attributed to an output. ‘Indirect costs’ are those costs that cannot be directly associated with a specific output.

Direct costs assigned to outputs

All direct operating costs are charged directly to outputs. Direct personnel costs are charged on the basis of the full-time equivalents that are directly attributable to an output. For the year ended 30 June 2008, direct costs accounted for 76% of the Ministry’s costs (2007: 73%).

Indirect costs assigned to outputs

All indirect costs are assigned to outputs on a percentage basis calculated on the number of full-time equivalents per output. For the year ended 30 June 2008, indirect costs accounted for 24% of the Ministry’s costs (2007: 27%).

(iv) Leases

Finance leases

A finance lease is a lease that transfers to the Crown as lessee, substantially all the risks and rewards incidental to the ownership of a leased asset, whether or not title is eventually transferred.

The Ministry for the Environment is not permitted to enter into finance leases under the Public Finance Act 1989.

Operating leases

An operating lease, is a lease where the lessor does not transfer substantially all the risks and rewards of ownership of an asset. Lease payments under an operating lease are recognised as an expense in a systematic manner over the term of the lease. Lease incentives received are recognised evenly over the term of the lease as a reduction in rental expense.

(v) Foreign currency

Transactions in foreign currencies are initially translated at the foreign exchange rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies at balance date are translated to New Zealand dollars at the foreign exchange rate at balance date. Foreign exchange gains or losses arising from translation of monetary assets and liabilities are recognised in the Statement of Financial Performance.

(vi) Cash and cash equivalents

Cash and cash equivalents include cash on hand and funds on deposit with banks.

(vii) Debtors and other receivables

Debtors and other receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate, less impairment changes.

(viii) Property, plant and equipment

Property, plant and equipment consists of land, buildings, leasehold improvements, furniture and office equipment, and computer hardware.

Property, plant and equipment are shown at cost, less accumulated depreciation and impairment losses.

Additions

Individual assets, or group of assets, are capitalised if their cost is greater than $1,500. The value of an individual asset that is less than $1,500 and is part of a group of similar assets is capitalised.

Disposals

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount of the asset. Gains and losses arising from disposal of property, plant and equipment are recognised in the Statement of Financial Performance in the period in which the transaction occurs. Any balance attributable to the disposed asset in the asset revaluation reserve is transferred to retained earnings.

Depreciation

Depreciation is provided on a straight-line basis on all property, plant and equipment, other than land, at a rate that will write off the cost or valuation of the assets, over their useful lives. The useful life of computer hardware (excluding laptops) changed from 3 to 4 years in May 2008. The useful lives and associated depreciation rates of major classes of assets have been estimated as follows:

	Depreciation rate (%)	Useful life (years)
Furniture and fittings	12.5 – 20	5 – 8
Office equipment	20	5
Computer hardware	25 – 33	3 – 4

Leasehold improvements (included in furniture and fittings) are capitalised and depreciated over the unexpired period of the lease or the estimated remaining useful lives of the improvements, whichever is shorter. Items classified as furniture and fittings but not deemed to be part of leasehold improvements are depreciated over their useful lives.

(ix) Intangible assets

Software acquisition and development

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.

Cost that are directly associated with acquiring software for the use by the Ministry, are recognised as an intangible asset.

Amortisation

The carrying value of an intangible asset with a finite life is amortised on a straight-line basis over its useful life. Amortisation begins when the asset is available for use and ceases at the date the asset is derecognised. The amortisation charge for each period is recognised in Statement of Financial Performance.

Typically, the estimated useful lives and associated amortisation rates of intangible assets have been estimated as follows:

	Amortisation rate (%)	Useful life (years)
Computer software	33	3
Computer software licences (Land Use and Carbon Analysis System)	13.33	7.5

(x) Creditors and other payables

Creditors and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method.

(xi) Employee entitlements

Pension liabilities

Obligations for contributions to defined contribution retirement plans are recognised in the Statement of Financial Performance as they fall due. Obligations for defined benefit retirement plans are recorded at the latest actuarial value of the Crown liability. All movements in the liability, including actuarial gains and losses, are recognised in full in the Statement of Financial Performance in the period in which they occur.

Other employee entitlements

Employee entitlements to salaries and wages, annual leave, long service leave, retiring leave and other similar benefits are recognised in the Statement of Financial Performance when they accrue to employees. Employee entitlements to be settled within 12 months are reported at the amount expected to be paid. The liability for long-term employee entitlements is reported on an actuarial basis, based on the present value of the expected future entitlements.

Termination benefits

Termination benefits are recognised in the Statement of Financial Performance only when there is a demonstrable commitment to either terminate employment before normal retirement date or to provide such benefits as a result of an offer to encourage voluntary redundancy. Termination benefits settled within 12 months are reported at the amount expected to be paid, otherwise they are reported as the present value of the estimated future cash outflows.

(xii) Statement of cash flows

Cash means cash balances on hand and cash held in bank accounts.

Operating activities include cash received from all income sources of the Ministry and the cash payments made for the supply of goods and services.

Investing activities are those activities relating to the acquisition and disposal of non-current assets.

Financing activities comprise capital injections by, or repayment of capital to, the Crown.

(xiii) Goods and Services Tax (GST)

All items in the financial statements, including appropriation statements, are stated exclusive of GST except where otherwise stated. Creditors and other payables and Debtors and other receivables in the Statement of Financial Position are stated inclusive of GST. Where GST is not recoverable as an input tax, then it is recognised as part of the related asset or expense.

The GST payable or receivable at balance date is included in Creditors and other payables or Debtors and other receivables in the Statement of Financial Position.

(xiv) Taxation

The Ministry is exempt from income tax in terms of the Income Tax Act 2004. Accordingly, no charge for income tax has been provided for.

(xv) Critical accounting estimates and assumptions

In preparing these financial statements the Ministry has made no significant estimates and assumptions concerning the future that affect the application of policies and reported amounts of assets and liabilities, income and expenses.

(xvi) Commitments

Future expenses and liabilities to be incurred on contracts that have been entered into at balance date are disclosed as commitments at the point a contractual obligation arises, to the extent that they are yet to be performed.

(xvii) Contingencies

Contingent liabilities and contingent assets are disclosed at the point at which the contingency is evident.

(xviii) Taxpayers’ funds

Taxpayers’ funds is the Crown’s net investment in the Ministry and is measured as the difference between total assets and liabilities. Taxpayers’ funds is disaggregated and classified as general funds.

(xix) Comparatives

When presentation or classification of items in the financial statements is amended or accounting policies are changed voluntarily, comparative figures are restated to ensure consistency with the current year.

2. Revenue other

Actual 30/06/2007 $000		Actual 30/06/2008 $000	Main estimates 30/06/2008 $000	Supplementary forecast 30/06/2008 $000
467	Departmental	521	428	428
281	Other	1,598	196	2,969
748	Total revenue other	2,119	624	3,397

3. Gains

Actual 30/06/2007 $000		Actual 30/06/2008 $000	Main estimates 30/06/2008 $000	Supplementary forecast 30/06/2008 $000
0	Net gain on disposal of property, plant and equipment	0	5	5
0	Total gains	0	5	5

4. Personnel costs

Personnel costs include expenditure and provisions for salaries, wages, annual leave, retirement and long service leave.

Actual 30/06/2007 $000		Actual 30/06/2008 $000	Main estimates 30/06/2008 $000	Supplementary forecast 30/06/2008 $000
20,353	Salaries and wages	22,809	23,155	23,922
555	Employer contribution to defined contribution plans	619	513	513
339	Increase in employee entitlements	269	0	0
3	Other	5	0	0
21,250	Total personnel costs	23,702	23,668	24,435

Employer contributions to defined contribution plans include contributions to the State Sector Retirement Savings Scheme, KiwiSaver and Government Superannuation Fund.

5. Capital charge

The Ministry pays a capital charge to the Crown on its taxpayers’ funds as at 30 June and 31 December each year. The capital charge rate for the year ended 30 June 2008 was 7.5% (2007: 7.5%).

6. Other operating expenses

Actual 30/06/2007 $000		Actual 30/06/2008 $000	Main estimates 30/06/2008 $000	Supplementary forecast 30/06/2008 $000
	Fees to auditor:
126	Audit fees for the financial statement audit	132	131	131
13	Audit fees for NZ IFRS transition	10	0	0
1,752	Operating lease payments	1,790	1,498	1,498
95	Advertising and publicity	842	0	0
2,931	Contributions and Sponsorship	5,350	3,492	6,099
14,904	Consultancy	17,013	25,568	20,673
4,083	General and administration	5,121	6,046	5,272
3	Net loss on disposal of property, plant and equipment	11	0	0
3,659	Other operating costs	3,804	4,810	5,321
27,566	Total other operating expenses	34,073	41,545	38,994

7. Debtors and other receivables

	Actual 30/06/2008 $000	Actual 30/06/2007 $000
Debtors	1,186	235
Less provision for doubtful debts	0	0
Net debtors	1,186	235
GST receivable	183	996
Total debtors and other receivables	1,369	1,231

The carrying value of debtors and other receivables approximates their fair value.

As at 30 June 2008 and 2007, all overdue receivables have been assessed for impairment and appropriate provision applied, as detailed below:

	Gross	Net	Gross	Net
Not past due	573	573	930	930
Past due 1 – 30 days	565	565	300	300
Past due 31 – 60 days	226	226	0	0
Past due 61 – 90 days	0	0	0	0
Past due > 91 days	5	5	1	1
Total	1,369	1,369	1,231	1,231

No provisions made for doubtful debts as all debtors are current. There were no indications at balance date these debtors are impaired.

8. Property, plant and equipment

	Furniture and fixtures $000	Office equipment $000	Computer hardware $000	Total $000
Cost or valuation
Balance at 1 July 2006	1,840	211	1,110	3,161
Additions	51	34	434	519
Revaluation increase	0	0	0	0
Transfer to held for sale	0	0	0	0
Disposals	0	(67)	(234)	(301)
Balance at 30 June 2007	1,891	178	1,310	3,379

Balance as at 1 July 2007	1,891	178	1,310	3,379
Additions	0	22	448	470
Add: Closing work in progress *	0	0	188	188
Less: Opening work in progress	0	0	(237)	(237)
Revaluation increase	0	0	0	0
Transfer to held for sale	0	0	0	0
Disposals	(49)	0	(147)	(196)
Balance at 30 June 2008	1,842	200	1,562	3,604

Accumulated depreciation and impairment losses
Balance as 1 July 2006	288	154	723	1,165
Depreciation expense	221	24	244	489
Eliminate on disposal	0	(57)	(234)	(291)
Eliminate on revaluation	0	0	0	0
Eliminate on transfer to be held for sale	0	0	0	0
Impairment losses	0	0	0	0
Balance at 30 June 2007	509	121	733	1,363

Balance as 1 July 2007	509	121	733	1,363
Depreciation expense	226	18	328	572
Eliminate on disposal	(8)	0	(147)	(155)
Eliminate on revaluation	0	0	0	0
Eliminate on transfer to be held for sale	0	0	0	0
Impairment losses	0	0	0	0
Balance at 30 June 2008	727	139	914	1,780
Carrying amounts
At 1 July 2006	1,552	57	387	1,996
At 30 June and 1 July 2007	1,382	57	577	2,016
At 30 June 2008	1,115	61	648	1,824

* The amount of work in progress as at 30 June 2008 relates to the development of the New Zealand Carbon Accounting System which will assist New Zealand in assessing its compliance with the Kyoto Protocol $187,558 (2007: $236,269).

There are no restrictions over the title of the Ministry’s property, plant and equipment, nor are any property, plant and equipment pledged as security for liabilities.

9. Intangible assets

	Acquired software $’000	Acquired software Licences $000	Total $000	Internally generated software $000	Total $000	Total $000
Cost
Balance at 1 July 2006	378	0	378	0	0	378
Additions	1,097	0	1,097	0	0	1,097
Disposals	0	0	0	0	0	0
Balance at 30 June 2007	1,475	0	1,475	0	0	1,475

Balance as at 1 July 2007	1,475	0	1,475	0	0	1,475
Additions	87	187	274	406	406	680
Add: Closing work in progress **	187	0	187	643	643	830
Less: Opening work in progress	(243)	0	(243)	(772)	(772)	(1,015)
Disposals	0	0	0	0	0	0
Balance at 30 June 2008	1,506	187	1,693	277	277	1,970

Accumulated amortisation and impairment losses
Balance as 1 July 2006	71	0	71	0	0	71
Amortisation expense	93	0	93	0	0	93
Disposals	0	0	0	0	0	0
Impairment losses	0	0	0	0	0	0
Balance at 30 June 2007	164	0	164	0	0	164

Balance at 1 July 2007	164	0	164	0	0	164
Amortisation expense	121	21	142	201	201	343
Disposals	0	0	0	0	0	0
Impairment losses	0	0	0	0	0	0
Balance at 30 June 2008	285	21	306	201	201	507
Carrying amounts
At 1 July 2006	307	0	307	0	0	307
At 30 June and 1 July 2007	1,311	0	1,311	0	0	1,311
At 30 June 2008	1,221	166	1,387	76	76	1,463

** The amount of work in progress as at 30 June 2008 relates to the development of the Financial Management Information System and New Zealand Carbon Accounting System $830,287 (2007: $1,014,746).

There are no restrictions over the title of the Ministry’s intangible assets, nor are any intangible assets pledged as security for liabilities.

10. Creditors and other payables

	Actual 30/06/2008 $000	Actual 30/06/2007 $000
Creditors	3,188	6,747
Accrued expenses	5,158	2,336
Fixed asset payable	0	110
Total creditors and other payables	8,346	9,193

Creditors and other payables are non-interest bearing and are normally settled within 30 days, therefore the carrying value of creditors and other payables approximates their fair value.

11. Repayment of surplus

	Actual 30/06/2008 $000	Actual 30/06/2007 $000
Net surplus	8,890	676

Total repayment of surplus	8,890	676

The repayment of surplus is required to be paid by 31 October of each year.

12. Employee entitlements

	Actual 30/06/2008 $000	Actual 30/06/2007 $000
Current employee entitlements are represented by:
Salary accrual	301	280
Annual leave	1,111	917
Retirement and long service leave	109	103
Total current portion	1,521	1,300
Non-current employee entitlements are represented by:
Retirement and long service leave	829	754
Total employee entitlements	2,350	2,054

The retirement and long service leave were valued by Aon Consulting as at 30 June 2008. The major assumptions used in the actuarial valuation were:

a discount rate has been used by finding the weighted averages of returns on government stock of different terms as at 30 June 2008. The rates used range from 6.42% to 7.09% depending on the term of the liability for each employee (30 June 2007: 6.27% to 7.37%)
a long-term annual salary growth rate of 3.0% (2007: 3.0%)
a promotional salary scale derived from the experience of New Zealand superannuation schemes.
The value of the liability is not material for the Ministry’s financial statements; therefore, any changes in assumptions will not have a material impact on the financial statements.

13. Taxpayers’ funds

	Actual 30/06/2008 $000	Actual 30/06/2007 $000
General funds
Balance of 1 July	3,039	2,043
Net surplus	8,890	676
Capital contribution from Crown	673	996
Provision for repayment of surplus to Crown	(8,890)	(676)
General funds at 30 June	3,712	3,039

14. Reconciliation of net surplus to net cash from operating activities

	Actual 30/06/2008 $000	Actual 30/06/2007 $000
Net surplus	8,890	676
Add/(less) non cash items:
Depreciation and amortisation expense	915	582
Total non-cash items	915	582

Add/(less) items classified as investing or financing activities:
(Gains)/losses on disposal of property, plant and equipment	11	3

Add/(less) movements in working capital items:
(Increase)/decrease in debtors and other receivables	(138)	(558)
(Increase)/decrease in prepayments	1	(22)
Increase/(decrease) in creditors and other payables	(736)	399
Increase/(decrease) in employee entitlements	296	340
Net movements in working capital items	(566)	162
Net cash from operating activities	9,239	1,420

15. Related party transactions and key management personnel

Related party transactions

The Ministry is a wholly owned entity of the Crown. The Government significantly influences the roles of the Ministry as well as being its major source of revenue.

The Ministry enters into transactions with government departments, Crown entities and state-owned enterprises on an arm’s length basis. These transactions are not considered to be related party transactions.

Payments amounting to $20,000 were made to review the systems and attendance at a course in relation to Kids’ Environment. A member of the Ministry’s senior management team was also the licensee of Kids’ Environment.

Apart from those transactions described above, the Ministry has not entered into any related party transactions.

Key management personnel compensation

	Actual 30/06/2008 $000	Actual 30/06/2007 $000
Salaries and other short-term employee benefits	1,725	1,493
Post-employment benefits	0	0
Other long-term benefits	0	0
Termination benefits	83	0
Total key management personnel compensation	1,808	1,493

Key management personnel include the Chief Executive and the seven members of the Senior Management Team. (2007: The Chief Executive and the six members of the Senior Management Team).

16. Events after the balance sheet date

No significant events, which would materially affect the financial statements, occurred between 30 June 2008 and the date of signing the financial statements (2007: nil).

17. Financial instruments risks

The Ministry’s activities expose it to a variety of financial instrument risks, including market risk, credit risk and liquidity risk. The Ministry has a series of policies to manage the risks associated with financial instruments and seeks to minimise exposure from financial instruments. These policies do not allow any transactions that are speculative in nature to be entered into.

Market risk

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Ministry has no significant exposure to currency risk on its financial instruments.

Interest rate risk

Interest rate risk is the risk that the Ministry’s return on the funds it has invested will fluctuate due to changes in market interest rates. Under the Public Finance Act 1989, the Ministry cannot raise a loan without Ministerial approval and no such loans have been raised. Accordingly, there is no interest rate exposure on funds borrowed.

The Ministry has no significant exposure to interest rate risk on its financial instruments.

Credit risk

Credit risk is the risk that a third party will default on its obligations to the Ministry, causing the Ministry to incur a loss.

In the normal course of its business, credit risk arises from debtors, deposits with banks and derivative financial instrument assets.

The Ministry is only permitted to deposit funds with Westpac, a registered bank. Westpac bank has a high credit rating of AA. For its other financial instruments, the Ministry does not have significant concentrations of credit risk.

The Ministry’s maximum credit exposure for each class of financial instrument is represented by the total carrying amount of cash and cash equivalents, net debtors (note 7), and derivative financial instrument assets. There is no collateral held as security against these financial instruments, including those instruments that are overdue or impaired.

Liquidity risk

Liquidity risk is the risk that the Ministry will encounter difficulty raising liquid funds to meet commitments as they fall due.

In meeting its liquidity requirements, the Ministry closely monitors its forecast cash requirements with expected cash drawdowns from the New Zealand Debt Management Office. The Ministry maintains a target level of available cash to meet liquidity requirements.

The table below analyses the Ministry’s financial liabilities that will be settled based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash flows.

	Less than 6 months $000	Between 6 months and 1 year $000	Between 1 and 5 years $000	Over 5 years $000
2007
Creditors and other payables (note 10)	9,193	0	0	0
2008
Creditors and other payables (note 10)	8,346	0	0	0

18. Categories of financial instruments

The carrying amounts of financial assets and financial liabilities in each of the categories are as follows:

	Actual 30/06/2008 $000	Actual 30/06/2007 $000
Loans and receivables
Cash and cash equivalents	18,488	10,249
Debtors and other receivables (note 7)	1,369	1,231
Total loans and receivables	19,857	11,480

Financial liabilities measured at amortised cost
Creditors and other payables (note 10)	8,346	9,193

19. Capital management

The Ministry’s capital is its equity (or taxpayers’ funds), which comprise general funds and revaluation reserves. Equity is represented by net assets.

The Ministry manages its revenues, expenses, assets, liabilities, and general financial dealings prudently. The Ministry’s equity is largely managed as a by-product of managing income, expenses, assets, liabilities, and compliance with the Government Budget processes and with Treasury instructions.

The objective of managing the Ministry’s equity is to ensure the Ministry effectively achieves its goals and objectives for which it has been established, whilst remaining a going concern.

20. Explanations of major variances against budget

Explanations for major variances from the Ministry’s estimated figures in the Statement of Intent are as follows:

(i) Statement of financial performance

	Actual 30/06/2008 $000	Main estimates 30/06/2008 $000	Variance $000
Contributions and sponsorship	5,350	3,492	1,858
Consultancy	17,013	25,568	(8,555)

Contributions and sponsorship costs were higher than budget due to the contribution towards World Environment Day community funding.

Consultancy costs were lower than budget partly due to the transfer of $4.386 million from 2007/08 to 2008/09 for the implementation of the Carbon Accounting System. Also, several work programmes were either not completed in 2007/08 or were completed using resources within the Ministry.

(ii) Statement of financial position

	Actual 30/06/2008 $000	Main estimates 30/06/2008 $000	Variance $000
Cash and cash equivalents	18,488	6,485	12,003
Debtors and other receivables	1,369	350	1,019
Creditors and other payables	8,346	5,880	2,466

The Ministry extended its year-end accounts payable cut-off to enable invoices from suppliers/providers to be included in the 2007/08 accounts. This resulted in higher than budget Creditors and other payables balances at year-end.

Crown funding was drawn down in line with the Supplementary Estimates which contributed to the higher cash balance. Also, several work programmes were either not completed in 2007/08 or were completed under budget. This resulted in higher than budget Cash and cash equivalents.

The higher Debtors and other receivables balance relates to invoices raised for the recovery of Call-ins’ costs at 30 June 2008.

21. Explanation of transition to NZ IFRS

Transition to NZ IFRS

The Ministry’s financial statements for the year ended 30 June 2008 are the first financial statements that comply with NZ IFRS. The Ministry has applied NZ IFRS 1 in preparing these financial statements.

The Ministry’s transition date is 1 July 2006. The Ministry prepared its opening NZ IFRS Balance Sheet as at that date. The reporting date of these financial statements is 30 June 2008. The Ministry’s NZ IFRS adoption date is 1 July 2007.

In preparing these financial statements in accordance with NZ IFRS 1, the Ministry has applied the mandatory exceptions and certain exemptions from full retrospective application of NZ IFRS.

Exemptions from full retrospective application elected by Ministry for the Environment

The Ministry is required to make the following mandatory exception from retrospective application:

a) Estimates under NZ IFRS at 1 July 2006 are consistent with estimates made for the same date under previous NZ GAAP.

Reconciliation of equity

There has been no change to the Ministry’s equity due to the adoption of NZ IFRS.

Intangible assets – computer software

Computer software was classified as fixed assets under previous NZ GAAP. Computer software has been reclassified as an intangible asset on transition to NZ IFRS

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